Net worth – Flashcards
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What is the difference between assets and liquid assets?
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NOT Assets are money gained from your job, while liquid assets are money gained from sources such as investments or inheritances.
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Which of the following is an example of increasing both current liability and use assets?
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NOT selling a motorcycle to pay off a debt
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Which of the following modifications to the list of assets and liabilities below would result in a net worth of $100,000?
Recreational Vehicle valued at $110,000.
Car valued at $27,000.
Medical bills totaling $8,700.
Loan balance of $80,000.
Savings of $5,000.
Retirement fund of $50,000.
Credit card balance of $2,300.
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NOT recreational vehicle value decreasing to $100,000
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Which of the following is a liability?
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Credit card balance
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Over the period of a year, Julie's net worth decreased. Which of the following could be true?
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Julie's assets decreased by more than her liabilities.
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The amount of money in a savings account is an example of which of the following?
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NOT long term asset
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Which of the following could be true if one decreases their long term liability and increases their liquid assets?
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Paid down mortgage and received a cash prize.
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The car owned by a person is part of his or her ____.
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Use assets
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Mr. Chavez has assets of $250,000 and liabilities of $18,000. He decides to finance the entire amount of the purchase of a car valued at $26,000. Which of the following is true?
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NOT Mr. Chavez increased both his assets and net worth.
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Which of the following modifications to the list of assets and liabilities below would result in a positive net worth?
Home owned $105,000.
Mortgage owed $100,000.
Car valued at $26,000.
Car loan of $22,000.
Investment fund of $4,500.
Savings of $1,500.
Credit card balance of $15,000.
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NOT Lowering mortgage by $1,000.
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Asset
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An asset is an item that is owned and has value.
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Liability
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Liability is a responsibility, an obligation, or a debt
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Net worth
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Net worth is the difference between assets and liabilities.
Assets - liabilities = net worth
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Determine your current financial situation
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Do you have a job?
What are your expenses?
Do you owe people money?
Do you have money saved in the bank?
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Liquid assets
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Cash and savings
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Investment assets
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Securities and invested funds
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Use assets
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Home, auto, personal possessions, durable goods
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Current liabilities
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Medical bills, taxes, credit card and charge accounts
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Long-term liabilities
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Home mortgage, auto loan
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Over the period of a year, Sam's net worth increased. Which of the following could be true?
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Sam's assets increased by more than his liabilities.
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Mary took out a loan to buy a $30,000 boat but had $2,000 cash to put down.Which of the following is true?
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Mary increased both assets and liabilities.
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Which of the following modifications to the list of assets and liabilities below would result in a negative net worth?
House valued at $90,000.
Mortgage owed $78,000.
Car valued at $11,000.
Car loan of $5,000.
Student loan of $13,700.
Stocks valued at $2,500.
Savings of $3,000.
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Borrowing $10,000 more in student loans.
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The following table shows the assets and liabilities of the Smith family in 2005 and 2009.
Based on the table, which of the following is true?
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From 2005 to 2009, both assets and liabilities decreased.
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Which of the following modifications to the list of assets and liabilities below would result in an increase in net worth?
Cash of $300.
Car valued at $28,000.
Car loan of $22,000.
Motorcycle valued at $6,000.
Savings of $2,000.
Credit card balances of $4,000.
Student loan of $10,000.
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All of the above
(Putting $100 in savings
Paying $100 on credit cards and
Getting paid $100)
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The amount of money invested in a retirement fund is an example of which of the following?
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Investment asset
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Ben owns a townhome valued at $195,000, but still owes $120,000 on the loan. Ben has $5,000 in savings and a balance of $1,400 on his credit cards. There is a balance of $20,000 owed on Ben's car which is valued at $38,000. What is Ben's net worth?
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96,600
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When it goes on sale for $1,600, Mikah buys a new plasma television that is valued at $1,800. He takes $300 from his savings account to use as a down payment and finances the rest. Choose the true statement.
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Mikah's assets increased by $1,500.
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The rare coin collection your grandmother gave you is part of your liabilities.
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F
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You have a car that is valued at $12,000. The balance that you owe on the car loan is $7,000. You lose your job and can not afford to make payments on your loan so you sell the car for $9,000 and pay off the loan. Explain how your net worth is affected by your actions.
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You have reduced your net worth. Before selling the car, your net worth is $12,000 - $7,000 = $5,000. After selling the car and paying off the loan, it is $2,000.
